Trading Strategy Index v Currency Pair

us dollar index graph

About this Strategy

The US Dollar Index is the value of the greenback versus a basket of currencies. Each one of this currencies have different weight in the index.

EUR=57.6%, JPY 13.6%, GBP 11.9%, CAD 9.1%, SEK 4.2%, CHF 3.6%

The US Dollar Index goes up in value when the US dollar gains, and most other currencies within the index fall in value. The US Dollar Index can be trade like any other CFD equity

Objective & Theory

To position long in two different  CFDs, and profit from the position with bigger value. The second position serve as a hedge even though it is a long position.

For Example: Buy 1 US Dollar Index CFD and Buy 1 EUR/USD CFD.

Theoretically the EUR/USD hedge the US Index by 57.6% because when the US Index rises the EUR/USD pair falls.

Technical Information

1 US Dollar Index CFD increases/decreases by 2 dollar a pip and  1 EUR/USD CFD increases/decreases by 10 cents a pip.

Difficulty Level

Traders have to be able to understand Forex market and have experience in CFD  trading.

15 Min Charts [ EUR/USD – US Dollar Index]

Pros & Cons

Possible lower risk Reduced Profit
Possible reduced losses Could lose in both CFDs
Profit from up or down trend Double exposure
Hedge in one account
Could win in both CFDs

Let’s get started...

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Risk warning: Your capital may be at risk. CFD trading is suitable for experienced traders and not beginners.